The Future Structure of HR Departments in an AI Enabled Era

Artificial intelligence is quickly reshaping how Human Resources functions deliver value. 

Recent analysis by Gartner argues that traditional HR operating models, built around HR Business Partners, Centres of Excellence and Shared Services, will not remain viable as AI becomes embedded in core processes (Nieberg 2026). As automation expands across recruitment, workforce analytics, performance administration and employee query management, HR departments will need structural redesign rather than incremental adjustment. Neiberg further argues those that don't, won't survive.

In an AI enabled environment, routine tasks such as candidate screening, payroll queries and policy interpretation will largely be automated. Gartner estimates that AI could perform or augment a significant proportion of current HR tasks by the end of the decade (Nieberg 2026). This shift will reduce reliance on traditional shared services teams and instead elevate digital HR platforms as the primary service interface.

Future HR structures are therefore likely to include a Digital HR Solutions function, responsible for system governance, data integrity, service design and AI performance monitoring. Rather than processing transactions, this team will optimise employee experience and ensure that AI tools remain compliant, ethical and aligned with business needs.

As AI improves efficiency, the ratio of HR professionals to employees is expected to change, from 423 employees to as high as one per 800 to 1200 employees. Static HRBP models may evolve into Strategic Talent Pods: agile, cross-functional teams combining human expertise with real time workforce analytics. These pods would focus on organisational design, capability planning, cultural development and leadership advisory.

In the Australian context, workforce planning pressures driven by skills shortages and demographic change reinforce the need for predictive capability. The Australian Bureau of Statistics reports ongoing tight labour market conditions across multiple sectors (ABS 2024). AI driven modelling can support evidence based workforce strategy, but interpretation and stakeholder engagement will remain human responsibilities.

Traditional Centres of Excellence will likely transform into HR Product and Experience Teams. Rather than designing broad policies, these units will curate targeted workforce solutions informed by data insights. For example, AI generated analysis may identify attrition risks within specific cohorts, prompting tailored career or wellbeing interventions.

The Australian HR Institute notes that HR capability increasingly requires digital literacy alongside strategic advisory skills (Australian HR Institute 2023). This suggests future CoEs must blend technology expertise with behavioural and organisational knowledge.

A critical structural addition will be a dedicated AI Governance and Ethics function within HR. This unit would oversee algorithmic transparency, bias mitigation and privacy compliance. Responsible AI oversight will become central to maintaining employee trust and organisational reputation. This is an area where the HR function may require assistance as it's a totally new skillset to anything currently performed by a HR department.

Human Capability at the Core

While AI will transform processes, it clearly will not replace HR’s human mandate. Culture building, complex employee relations, performance management, ethical judgement and change leadership require contextual interpretation and empathy. The future HR department will therefore likely be smaller in transactional roles but stronger in strategic, advisory and governance capability.

Organisations that proactively redesign HR structures, rather than layering AI onto legacy models, will be better positioned to deliver measurable workforce value.